Quantitative Easing Explained aka Why Stock Market is Booming
Eric Nakagawa stashed this in money
Stashed in: Economics!
The real reason FB bought WhatsApp for 19 billion? QE.
$19 billion sure ain't what it used to be.
How can I reclassify myself as a bank so I can get free money from The Fed that can sit there earning interest while I do nothing but refuse to loan it to consumers and businesses?
What do banks do with the money they get from selling a U.S. government bond to the Federal Reserve?
Nothing. It just sits in their accounts at the Federal Reserve earning a little bit of interest.
But isn't all that money flowing out into the economy, boosting stock prices and potentially causing inflation?
No. It's just sitting there. It has been the entire time. As of February 19, 2014 that excess reserve balance was $2.4 trillion according to the Federal Reserve.
I'm not greedy. I don't need a trillion. Much less than that will do.